Asia’s Big Democracies Are Drowning in Campaign Cash

India and Indonesia must stem a tide of legal and illegal political money to restore their people’s trust in democracy.

Democracy celebrated a high point last year when a combined 700 million people in India and Indonesia cast their votes in national elections. Now, as the two countries’ new leaders approach the end of their first year in office, many are asking what has come of their anti-corruption promises. Though both won resounding electoral victories with promises to clean up national politics, so far they have introduced few significant reforms.

To maintain the trust of their electorates, Prime Minister Narendra Modi of India and President Joko Widodo of Indonesia would do well to prioritize this issue. In particular, they should focus on reforming the use of money in politics. Lowering the cost of campaigning in both countries would allow equal chances to rich and poor candidates in future elections. It would also improve transparency by freeing all candidates from dependence on a few large — and sometimes shadowy — donors. This will require reforms in two major areas: enforcing existing laws more aggressively and closing legislative loopholes that allow much of the excessive spending to take place legally.

The campaign spending that the parties have actually reported seems reasonable — but it is only a small fraction of the total. In reality, much of the spending never makes it into the books. Indonesia’s winning Jokowi-Kalla and losing Prabowo-Hatta camps say they raised a combined $37 million. But the University of Indonesia’s Institute for Economic and Social Research estimated the real campaign costs at a staggering $920 million — that’s 25 times what was reported. In India, the Modi and Gandhi campaigns reported a joint cost of $205 million. But the country’s Center for Media Studies priced the campaign at $5 billion, also almost 25 times more. A large portion of these enormous disparities represents vote-buying and bribes, although some of the difference also stems from high media spending beyond legal limits and the cost of nominations and primaries, which occur before the start of the formal reporting period.

Although India and Indonesia are large democracies, the size of their electorates does not justify such high levels of spending. Indian and Indonesian real expenditure is higher than that of richer countries such as the United Kingdom ($91 million), Germany ($93 million) or Australia ($145 million). Per voter, that translates to $6.40 for India, compared to the UK’s $1.85. This is even more problematic when adjusted for income levels. In both countries, the high amounts spent represent a plethora of expenses that are either allowed by inadequate legislation or that are right-out illegal, but tolerated. For instance, candidates often have to pay to be included on their parties’ electoral lists, and then pay for expensive election campaigns in order to win. Media costs and handouts during town gatherings can be particularly expensive. This is all further facilitated by weak legislation governing political parties’ sources of income. International IDEA’s political finance database shows that Indonesia has very high donation limits of 1 billion rupiah ($82,000) for individuals and 7.5 billion rupiah ($600,000) for corporations, while India has none at all. As a result, candidates often end up in fundraising arms races bankrolled by extremely wealthy donors.

Such high spending, both legal and illegal, is a threat to public trust in democracy. It suggests that politics is only accessible to the rich or well-connected, which often disadvantages women candidates. The non-reported sums hint at massive vote buying and bribery. In both India and Indonesia, business leaders heavily influence campaigns or even enter politics themselves at the expense of less-networked or poorer candidates. Indonesian media tycoons and oligarchs turned politicians, such as Aburizal Bakrie, Surya Paloh, and Hary Tanoesoedibjo, dominated much of last year’s campaign. In India, where politicians rely on rich outsiders, candidates that are now in office have come under pressure to repay donors with lucrative government contracts or government positions.

In both Indonesia and India, a momentum to curb legal and illegal electoral spending has been building. Modi and Widodo were elected partly thanks to their promises to take on corruption, of which electoral spending is a major part. In particular, urban middle-class voters have become increasingly vocal in their protests against the nefarious role of money in politics. India already saw the emergence of a new anti-corruption party, the Aam Aadmi Party, which the country’s emerging middle-classes awarded a resounding victory in February’s Delhi state elections.

On the other hand, in both countries’ elections last year, more and more poor and rural voters — less educated, not as well informed, and more dependent on assistance than urban residents — expected handouts in exchange for their vote. Thirty-four percent of Indonesians experienced vote buying, according to the Asia Foundation. In India, the election commission confiscated $55 million it said was intended to buy votes – up from $32 million in 2009. As a result of the calls for cleaner elections by some constituencies and demands for rising handouts by others, political parties and candidates are hostage to a contradiction they themselves have created.

India’s new prime minister and Indonesia’s new president could heed this clarion call and re-visit the way politics in their countries handle money. Modi and Widodo can first of all address legal changes that lower the costs of elections. Indonesia should consider lowering donation limits, which International IDEA’s political finance database shows are among the highest in the world. Indonesia should also introduce spending limits, which exist in other Asian countries such as the Philippines, Bangladesh, and Thailand. It should, moreover, enforce limits on parties as well as candidates, so that money cannot be back-channeled to one via the other.

India can close similar loopholes by making both candidates and parties responsible for adhering to spending limits, anonymous donation bans and reporting requirements. To reduce parties’ dependency on oligarchs, it could introduce state funding of political parties and make its distribution conditional on sound reporting of party finances.

Apart from legal changes, both countries could further strengthen their oversight bodies to deal with the high amounts of unreported money. Since enforcement starts with transparency, they could make party expenditure information available online earlier. But they should also find ways to go beyond information gathering and apply sanctions more rigorously.

Political parties themselves should consider less expensive campaigning, such as using social media as part of their strategy. By raising large numbers of small donations, parties will not only become less dependent on a few large donors but also broaden their popular support. Both examples have already been successfully tried on a smaller scale in India and Indonesia, and can be expanded further.

Lastly, all meaningful reform starts with political will. Such political will has to come from the top. The political leaders of India and Indonesia won elections with the promise to increase transparency and fight corruption. Modi and Widodo would do well to start reforming the causes of their countries’ high electoral spending before their first year in office is over. Doing so would mean riding the wave of citizen demand for campaign finance reform and honoring the voters’ trust.